Nursing home in Gates files for Chapter 11

The privately run and for-profit Westgate ranked as the 18th-largest long-term care facility on the Rochester Business Journal's recent list of skilled nursing providers, ranked by number of licensed beds.

The Gates nursing home intends to stay in operation, Westgate owner and president Dennis Christiano Sr. said in an emailed statement.

The incomplete petition filed Tuesday with the U.S. Bankruptcy Court in Rochester is short on details. The 124-bed skilled nursing facility has 50 to 99 creditors, and its assets and liabilities each fall between $1 million and $10 million, the filing states.

Debts detailed on a list of Westgate's 20 largest creditors include a $388,076 loan owed to Christiano.

The largest debt on the list is $2.3 million owed to the state Office of the Pool Administrator. The sum is owed for "rates, recoupments, interest and penalties," the filing states.

The New York Office of Pool Administration maintains a fund made up of pooled contributions from hospitals and skilled nursing facilities. Such pools make payouts to help eligible critical-care facilities offset bad debt and charity care losses. Provisions of the state's 1996 Health Care Reform Act require hospitals and nursing homes to contribute.

The second-largest debt is $1.2 million owed for Westgate's health facility assessment, a fee imposed on health care facilities by the state. It requires providers to put a percentage of their monthly cash receipts in the state's coffers.

"We have conducted a comprehensive business evaluation to determine the most viable strategy to insure Westgate will continue to serve our residents and this community," Christiano explained in the email. "Filing for Chapter 11 protection was the only viable alternative."

The nursing home plans to work closely with the owner of its building at 525 Behan Road, Gates, to see that needed upgrades are made, and it plans to work with its vendors, funding agencies and the court to keep the nursing home in operation, Christiano said. Court protection would let the nursing home's residents remain at Westgate and keep its 110-worker staff on the job.

Westgate is the second privately owned skilled nursing facility in the area to falter in recent months.

Unlike Blossom South Nursing and Rehabilitation Center in Rochester, which is owned by Blossom South LLC, Westgate is not the target of state and federal regulators seeking to close it down over alleged health and safety violations.

Still, both Westgate and Blossom South, which followed 2010 and 2011 losses in the millions of dollars with a $752,000 loss last year, suffer financial stresses, a condition arguably due in large part to their high Medicaid populations.

Figures Westgate supplied to the Rochester Business Journal in October in a survey showed that it then had 101 of its 124 beds occupied, with Medicaid paying for 93 residents, Medicare paying for five and three paid with private funds.

A government insurance program for the indigent, Medicaid is jointly funded by the federal government and states. In New York, the state shares its portion of Medicaid costs with counties. The state's nursing home operators have long complained that New York's Medicaid reimbursements fall far short of operating costs.

Only facilities able to offset inadequate Medicaid rates with higher payments from private-payment residents and Medicare post-surgery rehabilitation patients can hope to survive, nursing home owner Robert Hurlbut told the Rochester Business Journal in a recent interview. Hurlbut, CEO of Rohm Services Corp., owns and runs a dozen Rochester-area nursing homes.

A report commissioned by the American Health Care Association found that Medicaid nursing home payments nationally fell short of home operators' actual costs in 2012 by an average of $22.34 daily per patient. The association, based in Washington, D.C., represents 10,000 non-profit and for-profit providers of assisted living, long-term care, subacute care and care for developmentally disabled people.

Closures of some area nursing homes in coming months and years might be inevitable, predicted Fran Weisberg, executive director of the Finger Lakes Health Systems Agency. Closures would understandably be upsetting to facility operators, she said. But in the longer term the region would not be hurt.

The Rochester area is oversupplied with nursing home beds, Weisberg said, citing findings of the Sage Commission, a group convened by FLHSA to examine the area's long-term care trends and needs.

In its 2011 final report, the commission recommended a winnowing of local nursing home beds with resources to be shifted away from institutional care.

The Rochester region's ratio of 50 long-term care beds per 1,000 residents 65 or older is higher than the national ratio of 40 per 1,000 and far above Oregon's ratio of 17.4 per 1,000, which represents best practices, the commission said.

More home care for the frail elderly, community-based services and expanded senior housing would be called for. Institutional long-term care should be a last resort, the report said.

Such changes not only would reflect seniors' preferences better but would help cut long-term care costs, Weisberg maintained.